|
|
| • EXCH RATES |
|
Baht/$ 33.32/36
Bid/Ask
|
GOLD |
15,150
+ 150
|
|
INTEREST RATES
WICHIT CHANTANUSORNSIRI & SOMRUEDI BANCHONGDUANG
Policies to push interest spreads downward and delay implementation of tougher accounting rules will not undermine the strength of specialised state banks, said Finance Minister Surapong Suebwonglee.
Dr Surapong said he would direct state banks this week to seek ways to cut their interest rate spreads in half to 2% from 4% now.
This would effectively either force state banks such as the Government Housing Bank, the Government Savings Bank or the Bank for Agriculture and Agricultural Co-operatives to raise deposit rates, lower loan rates or a combination of the two.
At the same time, state banks would also delay the use of IAS39, an accounting standard that tightens the provisioning requirements banks must set aside to cover distressed assets. Commercial banks, regulated by the Bank of Thailand, adopted IAS39 last year.
The new policy, first announced by Dr Surapong late last week, comes as the government is facing increased political pressure to take action to help spur the flagging economy and address rising inflation.
But while the new bank policy will benefit borrowers and depositors alike, it will mean reduced profits for state banks and also comes counter to the trend of rising interest rates for the overall market. The central bank earlier this month hiked its one-day repurchase rate by a quarter-point to 3.5% and signalled that further rate hikes are likely to clamp down on inflation.
In any case, Dr Surapong insisted that regulatory forbearance for the specialised state banks would not affect their stability or financial strength.
He noted that over 90% of US banks had yet to fully adopt IAS39 or the Basel II capital standard, a new framework to be adopted by local banks this year.
''It's similar to ISO standards. If a factory doesn't use ISO, it doesn't necessarily mean that factory doesn't have standards in place,'' Dr Surapong said.
He insisted that specialised state banks fundamentally were not profit-oriented organisations, but rather existed to implement government policy and support development strategies.
Sorasit Soontornkes, an assistant central bank governor, said the finance minister was fully empowered to waive IAS39 for specialised state banks under the law. He stressed that the use of IAS39 was beneficial for commercial banks and specialised financial institutions.
Analysts meanwhile say the new policy for banks such as the GSB and GHB would have a minor impact on commercial banks.
KGI Securities analyst Worawat Saisuphatphol said customer groups for specialised state banks and commercial banks were largely different, and did not believe the government policy would lead private banks to reduce their own margins.
''Falling spreads for state banks will not pressure private banks to follow suit,'' he said.
The policy could lead depositors to shift funds from private banks to higher-paying accounts at state banks, Mr Worawat said.
Another possible impact would be in the competitive home mortgage sector, where the GHB already stands as a market leader. Any move by the GHB to further reduce loan rates relative to private banks could increase pressure on local banks such as Kasikornbank, Siam Commercial Bank or Bangkok Bank that are also heavily involved in the mortgage market.
Tan Kong Khoon, the president of Bank of Ayudhya, said he believed that the Finance Ministry was committed to developing and adopting best international practices for the country's financial system.
But interest rates reflected a number of factors, including the cost position of each bank, its asset quality as well as overall market trends.
''Pricing is based on risk. For BAY, we still see net interest margins increasing further in the second half of the year in line with improved asset quality,'' Mr Tan said.
Prev
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Next
